Private Credit: KBRA-Rated Private Equity and Private Credit Firms Demonstrate Resilience Through Market Challenges

Amid ongoing trade tensions, tariffs, market volatility, and a possible economic slowdown, KBRA views alternative asset managers—particularly those geared toward private equity (PE) and private credit (PC)—as more resilient on average than other types of financial institutions. This resilience is primarily underpinned by a fee-based business model that ensures more stable and predictable revenue streams, as well as low liquidity needs, enabling such firms to better navigate more challenging conditions. Management fees tied to committed capital or invested capital at cost provide a cushion during periods of market stress or valuation adjustments. A flexible cost base adds to these firms’ resiliency.

Should trade tensions or broader geopolitical risks evolve into a protracted economic slowdown, asset managers will face potential headwinds, including delays in portfolio company exits, valuation pressures at the fund level, and a more difficult fundraising landscape. A contraction in deal…